Massimiliano Lattore and Salvatore Girone, charged for killing two fishermen off the Kerala coast in February last year, were permitted by the SC to go to Italy for four weeks for voting in last month’s election. However, in a surprise development last night the Italian government said that the marines would not return to India
In a mockery of RBI's independence, a lowly under-secretary of Dept. of Financial Services has issued a fatwa to government banks to penalise you if you pay your credit cards due by cheque! The under-secretary got this idea from HDFC Bank!
Nearly a month after Moneylife Foundation discovered and took up the issue of the Reserve Bank of India's (RBI) bizarre idea of penalising bank depositors for using cheques, we find that the idea or rather the fatwa to this effect had emanated from the finance ministry as far back as 25 October 2012 at the possibly at the instigation of India's most profitable bank.
On 25 October 2012, DD Maheshwari, Under Secretary in the Department of Financial Services sent out a fatwa marked "most immediate" to all chief executives of public sector banks (PSBs). The burden of this two-paragraph diktat was that "to discourage the use of physical/cash mode of transactions, all public sector banks are requested to consider charging a processing fee from the customer paying credit card dues either in cash or through cheque". HDFC Bank has recently increased such charges from Rs50 to Rs100 per transaction and has sent a communication to its customers in compliance with the regulatory requirement of giving a month's notice.
It doesn't stop at that, after holding up HDFC Bank's usurious charges as a role model for PSBs, the letter asks them to "consider issuing appropriate instructions in this regard" and send a "copy of the instructions" back to the finance ministry.
The finance ministry may have used the word 'consider', but its insistence that banks must report back to it shows that it is an order and various banks are planning to fall in line. The finance ministry's fatwa makes a mockery of the RBI's pretence that it is an independent regulator of banks, because the government has not even bothered to refer this issue to the central bank before issuing orders on what amounts to micro-management of bank charges.
RBI deputy governor Dr KC Chakrabarty has repeatedly exhorted customers to vote with their feet and move to another bank if they dislike the high costs and charges of foreign and private banks. It now appears that the finance ministry will forcefully intervene to ensure that they do not have PSBs to turn to.
The government, as owner of PSBs obviously feels it is within its rights to dictate charges, since it is coughing up vast sums of taxpayers money for bank recapitalisation (Rs14,000 crore is set to be pumped into PSBs for their recapitalisation just now). But instead of ensuring better loan recoveries from dubious industrialists such as Vijay Mallya of the UB group, realty companies and others, who owe tens of thousand crores to banks in bad loans, the government has hit upon the idea of punishing legitimate and tax paying bank customers with new charges.
It gets worse. The RBI, which has been lamenting that a large part of the Indian population is unbanked, then responds by setting up an internal committee to prepare a paper titled "Disincentivising Issuance and Usage of Cheques". This was put up on its website and open for public comment until 28th February. The report itself was kept low-key and been ignored by the mainstream media almost entirely. Moneylife had then pointed out that the plan to levy a series of punitive charges on the use of cheques, with the utopian objective of forcing people to use online money transfer facilities (such as NEFT and RTGS which are also charged) only punishes those with legitimate bank customers. Please read RBI Must Scrap No Cheque Idea, which is the most commented article in Moneylife since then.
Moneylife Foundation, which has over 21,000 members has sent a detailed memorandum to the RBI on behalf of depositors. Please see below...
A senior banker who writes for Moneylife under the pseudonym Gurpur also said that the RBI report on Dis-incentivising Issuance and Usage of Cheques "is a classic example of putting the cart before the horse. Because there are problems galore in the electronic payment system, and even before stabilising this, the RBI wants to dispense with the cheque system". See Incentivise usage of electronic payment systems before dis-incentivising usage of cheques. Gurpur followed it up with another article that pointed out how the UK had bowed to public pressure given up the idea of abolishing cheque usage. See UK govt bows to public pressure-rejects abolition of cheque system. Will RBI follow suit?
Moneylife had said, "The report on stopping the use of cheques makes you wonder whether RBI is accountable to us or exists solely to help banks enhance profits at the cost of customers, under the guise of seemingly lofty objectives". Ironically, the finance ministry's order makes it clear that it swings to the tune HDFC Bank.
The management acknowledges a very high level of costs in the system. The current cost structure is inflated due to underutilised capacities and FDA resolution related costs
Ranbaxy Laboratories, which has been a play on the generic opportunity in the US as blockbuster drugs go off patent, has been performing rather erratically. What are its prospects? For the December quarter, revenues were Rs1,441.52 crore while operating loss was Rs437.36 crore and net loss was Rs616.10 crore.
The management acknowledges a very high level of costs in the system. The current cost structure is inflated due to underutilised capacities and FDA resolution related costs. In addition, there are organisational and productivity related inefficiencies, which are now being addressed through various productivity improvement initiatives that kick-started in CY12.
The impact of price control on Ranbaxy will be higher than the broader market, given that Ranbaxy’s products are priced at a premium. Nomura analysts have factored in an annual sales impact of Rs750 million in CY14F.
According to the management, Ranbaxy continues to retain a substantial value of the businesses in emerging markets after rearrangement of the businesses with Daiichi Sankyo. Only in Mexico, the Ranbaxy business has been transferred to Daiichi Sankyo. As per the management, the profitability was limited and hence the transaction was value accretive. In most other markets including Brazil and Thailand, Ranbaxy continues to be key contributor to the business and retains a larger share of the value. In Brazil, where both Ranbaxy and Daiichi Sankyo have operations, Ranbaxy shall market only limited branded products through the Daiichi Sankyo network. The generic-generic business segment shall continue to remain with Daiichi Sankyo.
Nomura analysts’ valuation methodology largely remains unchanged. It values the base business at 17.5x CY14F to arrive at the December 2013 target price. It values the company at the lower end of the valuation range of large-cap generic companies which we value at 17-20x one-year forward earnings. The lower multiple is to account for relatively high volatility of the earnings profile. Stability and consistent improvement in base earnings could lead to higher valuation multiple. The projected base business EBITDA margin at 13.8% for CY14F is suppressed and hence could continue to improve and drive growth beyond CY14F. It incorporates the impact of derivate cash flow loss in the financials, which manifests in lower other income for the base business. The derivate loss pending beyond CY14F (that is the explicit forecast period) is incorporated in the valuations.
Nomura analysts increase the earnings forecasts by 3% and raise its target price to Rs475, 19% upside from the current levels.
There is new leadership for the India business. The company has hired Rajiv Sibal from Glenmark. The primary focus of the India business is on improving sales force productivity further and brand building. The company expects to deliver growth ahead of the broader market.